What does market share really mean?
I chatted with a friend a few days ago, and he was setting up a video conference company in mainland China. I questioned him on the level of video conferencing competition. He asserted that even though his business is still in its early stages, as long as it occupies 3% of the market share in the future, it will eventually grow to be worth $1 billion. I questioned him do you know what the market share means?
Market share in the usual sense, that is, the market share is the percentage of an industry’s sales that a particular company owns.
Investors are frequently informed by entrepreneurs of the market share their product will hold. Even at 3%, it is still worth a few billion dollars.
In actuality, there is little statistical relevance to a market share of less than 10%. With market changes, this amount might change quickly, making it challenging to anticipate with accuracy.
The real value of market share lies in how much chance you have to win customers.
For instance, a market share of 3% indicates that just 3% of buyers will opt to purchase your product. For instance, the majority of clients in my friend’s video conferencing sector will pick Teams or Zoom. The chances of it being able to snatch customers away from Teams or Zoom are extremely slim.
Customers are aware of their options since they have access to the same information. The only way to succeed is if the client is unaware of Teams or Zoom. But is it even feasible?
This is why businesses that are already very successful, like Zoom or Teams, will continue to do marketing— not so they can get leads immediately, but in case their clients don’t be familiar with these brands at some point in the future.
Therefore, it is tough to be a catcher in a fully competitive market. A low market share does not mean success, but failure.
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